From Deadline|London editor Tim Adler: Studios can breathe easy again. Ofcom, the UK communications regulator, has left them pretty much untouched in this week’s BSkyB clampdown. The regulator was expected to force Sky to cut the amount it charges cable rival Virgin Media for its movie channels. BSkyB was expected to slash its wholesale prices by 39%. Instead, nothing happened. Ofcom’s referring the whole question of movie channels to the regulator in Brussels. That’s because Sky’s linear movie channels just aren’t the force they once were. The action’s all moved on to video-on-demand.
The Competition Commission will now have two things to consider. First, whether BSkyB’s been stockpiling all the movies it can get its hands on to keep rivals out of the market. Second, whether Brussels should force Hollywood to unbundle movie rights so that channel rights and VOD are sold separately. If sold separately, then Hollywood could find itself in the money again. Studios would be getting paid twice for the same film. There’s the possibility they’ll make less money from selling unbundled rights to a number of customers than they did just selling to BSkyB. New TV movie services could launch on the back of Brussels intervening. However, it remains to be seen whether Hollywood will want to sell to anybody apart from BSkyB for fear of upsetting relationships there. And there’s also a question as to whether Brussels has any jurisdiction telling Hollywood what to do. The studios are separate entities. Unlike soccer clubs over here, they don’t bargain collectively.
All this could take years. By which time BSkyB, which says it needs all the movies it can get for its soon-to-launch on-demand Sky Player, will have elbowed its way in-between rivals Virgin Media and BT and their VOD movie offerings.
Media analyst Steve Hewlett tells me, “Hollywood can sigh with relief in the short term. While Ofcom’s position seems reasonable enough, the original complainants [Virgin, BT and Top-Up TV] are a bit miffed since they originally asked for the whole thing to be referred to Brussels. It’s taken three years for Ofcom to agree.”
Toby Syfret, media analyst at Enders Analysis, adds, “On the movie side, this investigation has run into the sand. And now there’s going to be another lengthy consultation.”
BSkyB called Ofcom’s telling it how much to charge rivals for its sports channels “unprecedented and unwarranted”. The satellite broadcaster will try and block implementation of Ofcom’s ruling. It’s not definite it’ll be able to stop Ofcom though.